Decisive leadership counteracts tough times

Every recent survey and analysis points to the approach of a tougher economy. The Financial Times’ John Gapper recently looked into the face of the “growing expectations of a U.S. recession” and the “varying degrees of uncertainty and worry” for business leaders for 2008. “The common theme is that the landscape is more treacherous than a year ago. It could also be a year in which the brave and deep-pocketed thrive at others’ expense.”
Well, you’ve been here before – once every decade or so. This time it’s the price of oil, the price of war, a soft spot in housing, U.S. debt, injured financial institutions, uncertain interest rates, developing international competition.
You won’t single-handedly fix any of these. But you won’t need to. In the past few cycles successful businesses have dealt with every one of them. Even as the hand-wringing intensifies, the reality probably won’t be worse than most of the economic traumas of the past 30 years, and certainly not the wake of 9/11.
Still, you need to face the problems sooner rather than later. So rather than waiting to suffer through a forced turnaround, transform your business now.
It may be instructive to note the approach taken by turnaround pros. Analyze the facts and embrace brutal honesty. Avoid emotional decisions. Shake loose from unmanaged momentum.
• Revisit your operation – from products to services, markets to competition, cash flow to financing – and know what is behind them.
• Focus on your sweet spot to make the most of your finite assets – capital and people.
• Get out of the underperforming products, businesses, facilities and markets that are outside your sweet spot, regardless of how much you love them.
This process isn’t ever easy and it may not be cheap. At the moment, time is your friend. Waiting will put you on a path of narrowing options.
In fact, we know that if you wait for the ultimate pain to develop, it probably will. We also know that you may then be cornered into forms of instant relief with your options limited to quick and dirty consolidating, frenetic cutting, possibly even mortgaging the business’ future to get through the short term. And don’t discount the potential for a loveless marriage of convenience with an unwelcome suitor. Oh, and don’t expect lots of help from creditors and investors.
Any of this would be nothing unique folks, it’s all happened to injured businesses before.
Who will accomplish these tasks? You’ll need leadership that is analytical, yet decisive; smart yet pragmatic. An objective look at the talent you have may reveal that you’ve got some of the change agents already in house. Unfortunately, if they are not ready right now, there will be little time to develop and train them.
In addition, some external perspective and expertise may be of great value. An outside perspective can be priceless. According to Hewlett-Packard Chairman and CEO Mark Hurd, who recently transformed the high-tech stalwart, “Great leadership is transferable across industries.” And the research on changing paradigms has shown the special value of an outside perspective.
Either way, inside or outside, look for change leaders who are seasoned pros and have the following qualities:
• Operations, marketing and financial acumen.
• The proven capacity to engage colleagues at all levels.
• A track record for effective external relations – with customers, suppliers, bankers, communities, the press, and unions where they exist.
In considering leaders for each function, make sure that they have an appreciation and understanding of the other functions and for business as a whole. Don’t hesitate to engage temporary outside talent, even a turnaround professional who can be engaged to prevent a fire, not just to put one out.
Of course, your current executive group may be the ideal transformational team, and you may be the right transformational leader. Just remember that delayed or incremental change won’t cut it. It’s time for business as unusual.
Many company cultures will opt for the comfort of the known, avoiding the tough decisions. So if you are leading change, you may have to affect people who have been a loyal part of your team.
But if changing circumstances dictate moving them on to other things, you’ll probably treat them better in their transition than would bankers, new owners or new leaders who would be stepping into a struggling business that’s running out of time.
Above all else, you’ve got to get the people thing right.
And what if the economy doesn’t slow down?
If decisive actions are taken, you will be better positioned regardless of the external factors. You will have an advantage over competitors who did not make the tough decisions – better positioned for your customers, employees, investors and creditors.
You will have top-graded your people, strengthened your financials, and focused your business. •
Stanley H. Davis is executive vice president of TowerHunter Inc., a national search firm with offices in Providence; Washington, D.C.; Phoenix; and Wakefield, N.H.

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